Asset allocation involves finding the right balance of asset classes, regions and managers to meet the investors goals. Skandia believes its new funds give
IFAs more flexibility than its existing actively managed funds because they have a narrower focus. In comparison, Skandias existing range of five actively managed multi-manager funds take a more general approach to asset allocation and are centred on risk profile and objective.
The new funds are all managed by Skandia chief investment officer Alan Durrant and combine funds of funds with manager of managers by including retail funds and segregated mandates.
This combination enables Skandia to offer access to a wider range of managers than focusing on one or the other. The funds will invest in well known UK retail fund managers such as Fidelity, Gartmore and Schroders, while also investing in specialist institutional managers that retail investors cannot normally access.
Looking in greater detail at the US equity blend fund, the use of segregated mandates from Alliance Bernstein and T Rowe Price in the current portfolio allows Durrant more control than accessing managers only through retail funds. However, the inclusion of the Legg Mason US equity fund shows the door is open to retail funds which Durrant feels can be blended with the mandates.
Durrant begins the investment process by looking at the main characteristics of a manager rather than starting with past performance. Managers are interview and those that are eventually chosen will be constantly monitored.
Skandias investment approach appears well suited to the US as different styles of stockpicking may be needed to find stocks which are not overpriced relative to their growth prospects. However, there are concerns about interest rate rises which could have a negative impact on economic growth in the US.